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Treat Your Broker/Financial Adviser Like a Boyfriend or Girlfriend: Be Clear About What You Want Upfront

Welcome back to part to my five-part series: Treat Your Broker/Financial Adviser Like a Boyfriend or Girlfriend. Today, I want to make something, which should be obvious, very clear: Know what you want, and make what you want very clear to your broker or financial adviser right from the beginning. There are two steps to this: First, knowing what you want.

In any relationship, as shallow as it may seem, people go in with certain expectations, needs, and wants, and that is perfectly okay. People’s expectations and desires vary from person to person. For example, some people like things to be extremely neat, other don’t care, some people like someone who is career driven, some people want someone to hike with, some people like boys, and some people like girls. Similarly, your financial needs, wants, and expectations are individual to you. The problem is, people only tend to know very generally what they want when it comes to their finances. For example, people may simple say, “I want growth,” or “I have a moderate risk tolerance.” It is your job to figure out, either with or without your financial adviser, what is right for you, and to know what exactly you stand to lose.

Now, many of you may be thinking, “I don’t know what I want. That is why I got this broker or financial adviser in the first place.” To this I say, you still need to do your homework. Signing up for whatever you think sounds okay at the time is a recipe to lose your money. You see, there is a concept called suitability. Suitability, in short, means whether the investments you are in matches you and all your characteristics (i.e. age, risk tolerance, income, etc.). It is important that you make all these and many other factors clear to your broker. This brings me to the second step, make sure you are clear with your broker and make sure that you are both on the same page. Knowing that you have a moderate risk tolerance is great, but this leaves a lot of room for interpretation. A moderate risk tolerance relative to what is a very important question. Remember, healthy relationships are formed when people are clear about their wants and desires. Accordingly, know what you want, and make it very clear when it comes to someone handling your money.